Behind the Albanese government's secret plan to upend the stage 3 tax cuts
At the start of this month, Capital Brief stumbled on the massive story that the Albanese government was planning to overhaul the stage 3 tax cuts. Here’s how it played out.
The third stage of the former Coalition government’s tax cuts, which would have disproportionately benefited higher income earners, has never been popular within Labor. Anthony Albanese and Jim Chalmers promised to keep the package in full at the 2022 election as part of their small-target strategy to win power. But their hearts were never in it.
Once they got into government the Prime Minister and Treasurer were always inclined to change stage 3. But with Julia Gillard’s ‘no carbon tax’ pledge front of mind, they knew any move to amend them would be cast as a broken promise and leave them open to politically damaging attacks from the opposition. Still, they came close to overhauling the tax cuts in the lead-up to their first budget in October 2022, but Albanese got cold feet.
Ever since there has remained a notable lack of enthusiasm for the cuts but no firm suggestions of a policy change. When Capital Brief interviewed Chalmers back in August 2023, he did not contest the concerns people had about higher income earners being significantly favoured by the cuts and simply said he supported “some” of the bracket creep being returned to taxpayers.
But the conventional thinking within Canberra going into 2024 was that they had left their run too late: Labor would stick with the tax cuts considering that they were due to come into effect on 1 July.
